Avoid Bankruptcy - What Can I Do to Avoid Bankruptcy?

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4 Steps to Avoid Bankruptcy

How can I possibly avoid bankruptcy? That question is difficult to answer, depending on what the individuals circumstances are. However, this article is going to give you four common sense ways that may help you to avoid personal bankruptcy. You must understand that this is not legal advise, nor should it be used as such. It is strongly recommended, that qualified legal advise, should be consulted prior to any decisions you make regarding debt reduction.

1. If your full time job is the type of employment that will allow you to seek a second job that is the fastest way to produce increased cash flow. This money should only be used to pay off your current debts. A part time job that will provide two hundred dollars a week will provide you eight hundred dollars a month to reduce outstanding debt. Make certain that you make a list of all your debts. List the debt's with the highest interest rate at the top of the list and systematically work your way through your list.

2. Immediately stop using your credit cards. Give them to your spouse, lock them up or take the ultimate drastic step and cut up your credit cards. If you should decide to cut them up it is a good idea to keep the one with the lowest balance and interest. Use that one card for emergences only. Pay cash for all other expenses.

3. Review your assets and determine which ones have the highest equity value in it. In some case you will be amazed at how much equity that you have accumulated in your home since you purchased it. The appreciation in your real estate may be more than high enough to pay off your debt. However, if you cannot meet the debt service on a second mortgage or a new mortgage do not use this method for reducing your debt.

4. If you are fortunate enough to have an automobile that has equity in it you may be able to sell it. Take the equity and buy a car that has a lower debt service and use the balance of the equity to reduce your debt. However, make sure you don't buy a car that is so cheap that it will nickel and dime you to death.

These are just a few of the steps that can be taken to avoid bankruptcy.